June 27, 2024 (MLN): The National Clearing Company of Pakistan Limited (NCCPL) has announced the applicable rates for withholding tax on the Government of Pakistan Ijarah Sukuk (GIS) traded on the Pakistan Stock Exchange (PSX), ranging from 10% to 25%.
As NCCPL is acting as a paying agent on behalf of Pakistan Domestic Sukuk Company Limited, it will compute and withheld withholding tax on Profit accrued on GDS under requirements prescribed under the Income Tax Ordinance, 2001 at the investor level.
This withholding of tax shall be carried out on disposal of GDS along with CGT computation, the clearing company further said.
However, the withholding tax shall be deducted from the sale proceeds at the time of settlement.
Moreover, CGT for GDS shall be computed and collected as per the existing mechanism on a monthly basis.
The applicable rates for withholding tax on GIS, as prescribed under Division IB of Part III of the First Schedule of Ordinance, are reproduced below:
25% in case the sukuk-holder is a company.
12.5% in case the sukuk-holder is an individual or an association of person if the return on investment is more than 1 million.
10% in case the sukuk-holder is an individual and an association of person if the return on investment is less than 1m.
All Clearing Members are therefore requested to submit any exemption/undertaking provided / available concerning its customers or on a proprietary basis at the earliest convenience to avoid withholding of tax.
It may please be noted that taxpayers holding specific exemption from withholding of tax under the Income Tax Ordinance, 2001, shall be required, to provide only specific provision of the Ordinance where exemption is mentioned.
